Impact of Employee Satisfaction on Success of Organization

INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY SCIENCES AND ENGINEERING, VOL. 2, NO. 5, AUGUST 2011

[ISSN: 2045-7057] www.ijmse.org 41

Impact of Employee Satisfaction on Success of

Organization: Relation between Customer Experience

and Employee Satisfaction

Afshan Naseem1, Sadia Ejaz Sheikh

2 and Prof. Khusro P. Malik GPHR

3

1,3Department of Engineering Management, Centre for Advanced Studies in Engineering, Islamabad, Pakistan

2COMSATS Institute of Information Technology, Attock, Pakistan

Abstract– Employee satisfaction is considered weighty when it

comes to define organizational success. Employee’s satisfaction

is central concern particularly in the service industry. Need to

enhance employee satisfaction is critical because it is a key to

business success of any organization. In the present milieu,

employee satisfaction has come under limelight due to stiff

competition where organizations are trying to carve competitive

advantage through the human factor. The purpose of this study

is to observe the relationship between employee satisfaction and

customer satisfaction and to examine the impact of both on

organizational success. This study scrutinizes the effects of

different factors of organization which affects the employee

satisfaction. This is a cohort study in which qualitative research

methodology was used. The data was collected through self-

administrated questionnaire which contains multiple choice

questions and open-ended questions. Results of the principal

component analysis (PCA) based on correlation matrix revealed

a great deal of employees (hotel workers) satisfaction among

surveyed cohorts where customers also had expressed

satisfaction with existing services. Mainly environmental

cleanliness, quality food and room services has played vital role

in creating contentment and subsequent satisfaction among

customers. From employee’s perspective, conducive working

atmosphere coupled with incentives like salary and frequent

trainings focused the employees to work with dedication to uplift

the organization (hotels) which is reflected clearly by the

satisfaction level of customers. Our study confirms indirect

relation between organizational success and employee

satisfaction which was mediated by customers. In conclusion, it

seems reasonable to believe that understanding of employee role

is extremely important as it appears key factor in the success of

modern organization.

Keywords– Employee’s Satisfaction, Organizational Success,

Customer’s Satisfaction and Job Satisfaction

I. INTRODUCTION

Employee satisfaction plays a significant role in defining

organizational success. It is necessary to understand as to

Afshan Naseem has done MSc in Engineering Management from Centre for

Advanced Studies in Engineering (CASE), Islamabad, Pakistan, 2009. (Email:

[email protected]).

Sadia Ejaz Sheikh has done Masters in Management from Center for

Advanced Studies in Engineering (CASE), Islamabad, Pakistan, 2010. (Email:

[email protected]). Prof. Khushro P. Malik teaches at Center for Advanced Studies in

Engineering (CASE). He holds MBA degree from University of Ottawa and

Masters Degree in Public Administration from Punjab University. He is certified

“Global Profession Human Resources” by HRCI USA. He has extensive work

experience. (Phone: +92-300-8503903; e-mail: [email protected]).

how employees can be kept satisfied and motivated to achieve

out-of-the ordinary results. Customer satisfaction seems to be a

natural corollary of employee satisfaction and in turn

organizational success is upshot of this duo.

There is a need to create a work environment that

encourages employees to give quality response to customer

needs. This is the key to pull service-profit chain of business.

Satisfied employees generate customer satisfaction by

excellence in performance that leads to organizational success

thus resulting in improved financial success. So there is a direct

connection between employee satisfaction and customer

satisfaction.

Employee satisfaction not only enhances the productivity,

but also increases the quality of work. It is necessary for a

company to perceive as to what employees feel, think, desire

along with discovering how the workforce devotion and

commitment can be increased. With amplifying employee

devotion, business outcomes can be improved, productivity can

be enhanced, commitment can get intensified and attrition rate

can take a dip.

There is a cause-and-effect relationship between the

customer satisfaction and employee satisfaction. It is unfeasible

to uphold customer loyalty without employee loyalty. Customer

service eventually depends on the community who provide that

service. For that matter, employee loyalty and volunteerism are

required especially for those employees who serve on front

lines. Loyalty, devotion and volunteerism cannot be enforced on

people. It can only be done by providing them encouraging and

satisfying work environment.

II. LITERATURE REVIEW

A. Customer Satisfaction

Business environment has changed due to globalization

and free trade and the global competition is increasing with

exploding. Because of these reasons, to stay in a competitive

environment and deliver acceptable financial returns,

managers must know how to handle changes which are

unexpected.

Financial performance depends on customer satisfaction.

There is a direct relation of financial performance and

customer satisfaction and indirect relation with employee

satisfaction which is intervened by customer satisfaction. But

there is a direct relation between customer satisfaction and

employee satisfaction. The relation between employee



satisfaction and financial performance may not be found

because it is mediated by customer satisfaction [1].

In service industry, customer satisfaction is the key to

success. A positive relationship exists between customer

satisfaction, employee satisfaction and perceived service

quality. Customer perceived service quality completely

intercedes between job satisfaction of employees and

customer satisfaction. Service-profit chain framework shows

that employees who are satisfied can be more productive than

those employees who are less satisfied [2].

B. Employee Satisfaction

It is factual that employee satisfaction is an innermost

concern in service industry. It is a multi-factorial construct.

Employee satisfaction contains basic factors, excitement

factors and performance factors. Basic factors are the

minimum requirements that cause dissatisfaction. Excitement

factors increase customer satisfaction and performance

factors result in satisfaction only when performance is high

[3].

Employee satisfaction is closely related to service quality

and customer satisfaction which is then related to firm

profitability. Service quality has a positive persuade on

customer satisfaction. Besides this, firm profitability has a

reasonable non-recursive effect on employee satisfaction.

Employee satisfaction plays a considerable role in enhancing

the firm profitability and improving operational performance

of organizations and quality of goods and services. There is

no doubt in it that employee satisfaction is critical to attain

quality and profitability in service industry especially.

Employee satisfaction impacts quality at industry through

satisfaction-quality-profit cycle. In service industry, to

achieve quality and profitability at organization, employee

satisfaction is fundamental and without it, service industry

cannot think of being successful [4].

Employee loyalty is the important factor to improve

service quality which is interconnected to customer

satisfaction and customer loyalty and it gives progress to

make firm profitability in industries. [8].

An imperative relationship exists between employee and

organization. This employee organization relationship plays

an important role in success of any organization. There is a

need of developments in it. Managers are believed to develop

a role relationship in which actions and decisions should

promote the interest of organization. Employee involvement

and contributions in organization is outcome of the interest.

The quality of employee organization relationship requires

fulfillment of needs, quality of interaction, adaptability and

identification [5].

Employee empowerment is also an effective way of

satisfying them. When employees are given employee

empowerment, then it leads to job satisfaction. Employee

empowerment also causes customer satisfaction. Similarly

job satisfaction also leads to customer satisfaction which

leads to organizational success [6].

Employee satisfaction is in fact job satisfaction. Job

satisfaction is an important job organization factor. Both of

them are significantly related. Therefore, it is necessary to

maintain job satisfaction so that employees can be motivated.

In studying job satisfaction, job rotation, work method,

problem solving and goal setting are important factors to

consider and job satisfaction is also influenced by employee’s

age, marital status and work experience [7].

The distinction of individual employment characteristics

may influence how employees feel about their work

environment [9] and the relationship between employee

satisfaction and financial performance may not be easily

perceptible due to the fact that it is reconcile by customer

satisfaction [10].

III. METHODOLOGY

A. Measurement

In this research paper, we investigate factors of employee

satisfaction that affect organizational performance. For

exploring those factors, firstly customer’s experience was

accumulated. Satisfied employees would culminate customer

satisfaction and this will result in organizational success.

Based on literature review, two self-administrated

questionnaires were developed. One questionnaire was

designed to get response from customers for their experience

at hotels and other questionnaire was designed to get

response from employees for their job satisfaction.

In questionnaire designed to collect customer satisfaction

data, following things were observed:

• The customers/respondent’s personal profiles related to

gender, education, income and willingness to stay at

hotels.

• The customers experience related to greeting,

atmosphere, environmental cleanliness, food and service

quality.

In questionnaire designed to collect employee satisfaction

data, the following things were observed:

• Employee salary and promotion.

• Employee satisfaction related to the guidance and

training to employees and their physical working

conditions.

• Employee response related to work load at employees

and their contribution.

All the responses were measured using Likert-type scale,

where 1=strongly disagree and 5=strongly agree.

B. Data Collection

In this research, data was collected from 12 well known

(five or seven stars) hotels in 4 big cities of Pakistan. The

questionnaires were distributed among customers and

employees and requested to fill them up with their personal

preferences.

A total of 150 questionnaires were collected from

customers and 25 questionnaires were collected from

employees. Among them, 132 customer questionnaires and

20 employee questionnaires were selected for analysis

because remaining questionnaires were having incomplete

answers.

C. Data Analysis



The collected data was recorded in SPSS tool for

analysis of data. Contingency tables were prepared to

analysis variations between male and female customers. Chi-

square test of independence was used to check the visiting

customers with respect to gender vary in education or not.

Also through χ2-test, the preference among male and female

customers was analyzed for the duration of stay in hotel.

Principal component analysis was performed on both types of

data set (customer and employees) to identify components

(variables) with maximum loading scores that account

highest variance in the data. This would enable us to select

attributes in customer experience and employee satisfaction.

IV. RESULTS

Overall description of the survey is presented as case

processing summary with respect of male and female

respondents. Two variables are described here, one related to

education status of the customers while other variable was

about duration of stay in hotel. Response for former variable

was 100% while a number of customers declined to respond

about latter variable. Therefore, cases with missing values

were omitted from the raw data during analysis.

A. Customer Satisfaction

i). The relationship between gender of customers who

visited the hotels and their education was evaluated by chi-

square test to homogeneity. The results indicate that there is

significant relation between education level male and female

customers.

ii). The preference of duration of stay between males and

female customers was appeared non significant and it seems

that the hotels surveyed in this study are equally preferred by

male and female in terms of deciding how many days they

want to stay.

The scores of somewhat agree and strongly disagree are

separated in first dimension as there have large negative

scores which is also shown in biplot diagram. This indicates

that most of the customers are decisive in terms of

environmental cleanliness which they have observed in the

hotels. This trend is confirmed as the principal component

analysis has separated the responses of customers in varying

category points visible in bioplot diagram (Fig. 1).

In the above table, each eigenvalues corresponds to a

factor and each factor to one dimension. The highest

eigenvalues were observed for the first three factors

indicating high percentage of variance ensuring that

maximum variation are accounted in first three dimensions.

The results presented here indicate that overall satisfaction of

customers was fairly high particularly for educated customers

who preferred to stay for longer duration in hotels. The other

factors which contributed in bringing satisfaction level

among customers are environmental cleanliness and health

atmosphere coupled with good quality of food, beverage and

room services.

B. Employee Satisfaction

The PCA performed on the variables pertaining to

employee’s satisfaction revealed a definite relationship

between satisfaction levels of employees and the parameters

tested. The maximum variance in the data set was revealed in

the first two dimensions of the principal component axes with

highest eigenvalues. Among the parameters tested, monthly

income and working conditions had enabled most of the

employees to stay with the present job and they did not left

the job because of salary insufficiency. The PCA scores

obtained on second component axis also explains that

employees are satisfied with the guidance and training

facilities and therefore they have not thought of searching or

dreaming for other jobs.

1.00.50.0-0.5-1.0

Dimension 1

0.5

0.0

-0.5

-1.0

Dimension 2

Strongly Agree

Somewhat Agree

Neutral

Somewhat Disagree

Strongly Disagree

Variable Principal Normalization.

Category Points: Env. cleanliness is keenly observed

Fig. 1: PCA biplot for the response of customers about cleanliness in hotels.

Category

Env. Cleanliness is

keenly observed

Frequency

(N = 132)

Centroid Coordinates

Dimension

1 2

Strongly Disagree 33 0.696 0.635

Somewhat Disagree 33 -0.947 -0.104

Neutral 29 -0.035 0.469

Somewhat Agree 27 0.603 -0.86

Strongly Agree 10 -0.699 -0.789

Table 1: Category Analysis



Table 2: Case Processing summary

Level of Education

Total Less than high

school High school Bachelor's Degree Graduate Degree Doctorate

Gender Male Count 18 24 24 8 10 84

% within Gender 21.4% 28.6% 28.6% 9.5% 11.9% 100 %

Female Count 12 14 6 15 1 48

% within Gender 25.0% 29.2% 12.5% 31.3% 2.1% 100 %

Total Count 30 38 30 23 11 132

% within Gender 22.7% 28.8% 22.7% 17.4% 8.3% 100 %

Pearson χ2 = 15.45

P < 0.005

Table 3: Level of Education

Stay in Hotel

Total One

day Two days Three days Four days Five days

Six or

more days

Gender Male Count 7 15 16 18 16 4 76

% within Gender 9.2% 19.7% 21.1% 23.7% 21.1% 5.3% 100 %

Female Count 2 3 5 2 1 0 13

% within Gender 15.4% 23.1% 38.5% 15.4% 7.7% .0% 100 %

Total Count 9 18 21 20 17 4 89

% within Gender 10.1% 20.2% 23.6% 22.5% 19.1% 4.5% 100 %

Pearson χ2 = 3.96

Non significant

Table 4: Variable Principal Normalization obtained by Principal Component Analysis (PCA)

Case Processing Summary

Valid Missing Total

N Percent N Percent N Percent

Gender vs Education 132 100.0% 0 .0% 132 100.0%

Gender vs Stay 89 67.4% 43 32.6% 132 100.0%



Variable Description Principal components extracted

Dimension 1 Dimension 2 Dimension 3 Dimension 4 Dimension 5

Eigenvalues => 1.598 1.515 1.385 1.274 1.175

Customer Satisfaction with overall 0.73

Education 0.70

Duration of Stay in hotel 0.69

Env. cleanliness is keenly observed 0.79

Hotel Atmosphere is healthy 0.62

Appropriate music is being played –0.76

Interior design and decor is perfect –0.65

Employees are attentive 0.69

Employees are helpful and friendly

Good quality room services 0.66

Food quality was good 0.71

Beverage quality was good 0.77

Food taste and appear was excellent

Menu variety was admirable

Table 5: Results of the Principal component analysis (PCA) for variables reflecting customer satisfaction, the scores over 0.5 were included in this analysis

Variable Description Principal components extracted

Dimension 1 Dimension 2 Dimension 3 Dimension 4

Eigenvalues => 3.410 2.055 1.418 1.160

Monthly Income 0.69

Guidance and training 0.77

Physical working conditions are very good 0.67

Rules and regulations affect your performance negatively –0.53

All employees at your hotel are promoted with their performance –0.71

Salary is reasonable according to job 0.87

Many colleagues left the job because Salary was not reasonable –0.80

You are satisfied with this job 0.54

Appropriate recognition given for my contribution 0.58

Work load of my job is reasonable 0.69

I spend parts of my day dreaming about better job –0.69

Table 6: Results of the Principal component analysis (PCA) for variables reflecting employee satisfaction, the scores over 0.5 were included in this table



V. DISCUSSION AND IMPLICATIONS

The results have following main findings.

• The customers are conscious about cleanliness of

hotel. And if cleanliness is keenly observed in hotels, it

shows the interest of employees.

• The variables accounted with highest PCA scores

indicate that overall customer satisfaction is quite

focused in terms of valuing specific aspects in hotels

such as health atmosphere, good quality of food and

beverages. In addition, room service has also been the

focus of customers in values the satisfaction.

• Among most of the variables, identified in our study,

one aspect is striking i.e. unless the concerned

employees worked with dedication, the challenge to

bring satisfaction among customers would be tough.

However, this was not the case as most of the aspects

pertaining to customer satisfaction were properly

addressed without any major flow. This at one indicate

hand an ardent workforce of hotel employees and

successful organizational behavior at managerial scale

the other hand for creating passing and zeal among

employees which was reflected by high level of

customer satisfaction.

• Here the significance of long term investment made by

any organization in developing human resource

becomes evident. Since in our survey results a striking

snapshot of the significance of the selected attributes

in customer experience and employee satisfaction were

found interdependent, therefore, it is worth mentioning

that hotel managers planning their policies and allocate

resources keeping their employees with a high priority

would benefit from substantial customer gain and

organizational success simultaneously.

• The implications of meeting future demands of

customers have always been a challenging task. Our

study is therefore quite significant in setting the

benchmarks for customer satisfaction related to hotel

industry particularly in the competitive environment of

present era. Hence more relevant, up-to-date and

accurate information about various aspects of

customers such as demography, age groups and

financial status would be important for hotel managers

and owners to introduce incentives for capturing the

attention of maximum customers.

VI. CONCLUSION

This research scrutinized the factors of employee

satisfaction that satisfy customers which results in

organizational success. Considering the results of current

work, we conclude that local public enterprises such as

investigated in this study is not independent and tied with

factors indirectly related to each other. The findings of this

research suggested that impact of employee satisfaction on

the success of organization is undeniable. Moreover,

sustaining the satisfaction level of customers is a continuous

process whose basics are intricately linked with the

employees whose performance reflects through customer

satisfaction and organization progress.

VII. LIMITATIONS OF STUDY

There are various limitations of this study. Although

survey was conducted in 4 cities of Pakistan, but as all other

cities are not covered so generality of the findings is not

warranted. Besides this, there is a need to observe and explain

SPSS results carefully and cautiously.

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Impact of Employee Satisfaction on Success of Organization